Real estate coaches and the value of ongoing training have never been more crucial. As 2023 winds down, level up with advice from top coaches, training resources and so much more during Inman’s Coaching and Training Month in October.
What do you want your life to look like? What does it take to grow your cash flow and net profits, not just your revenue? How can you cut the fat from your business without cutting the muscle? Is Zillow worth the money many agents are paying for leads, especially when there are proven zero-cost lead-generation strategies that really work?
Verl Workman, the founder and CEO of Workman Success Systems, has the answers to these questions plus insights on trends no one else is discussing.
I recently interviewed Workman, a top industry speaker for over 20 years and the industry’s leading expert on teams. What differentiates his company from other coaching companies is that they not only coach team leaders, they also provide training and development for every member and level of a team.
This also includes leadership development since as Workman observes, “Being good at selling real estate doesn’t mean that you’re going to be a great leader.”
What do you want your life to look like?
Workman believes one of the biggest pitfalls any real estate agent faces is trying to do it all yourself.
To me, when you say I’m doing it by myself, I feel bad for you. That means you don’t have life balance, you don’t have leverage and you’re not living your best life because you’re always available.
Workman flips the model from being numbers-based with no regard to your personal life to focusing on your family, personal life and goals first.
Creating financial intelligence
Workman explains that what constitutes financial intelligence for most agents is how much money they have in the bank. If you have enough, you’re OK, and if you don’t, you’re struggling. The problem here is that this approach fails to address cash flow and net profit, i.e., how much you have after expenses.
To consistently grow your business and your profitability, Workman recommends tracking what he calls “financial benchmarks.” This means breaking down your expenses and putting them in various buckets to evaluate whether that bucket is profitable or should be discarded. Examples of what buckets to track include how much is spent on:
- Client gifts
- Lead generation
The next step is to examine your Return on Investment (ROI). Based on that information, you can then decide whether you should keep spending money on that item or eliminate it. To illustrate this point:
If you spend money on lead sources, our rule of thumb is you should be getting a 6X return. So, if you spend $1,000 a month on Zillow or Boomtown or whoever your high-volume lead sources [are], show me $6,000 a month in ROI. If you’re not getting it, the first question is why, and can we fix it?
If we can’t fix it, and “That dog doesn’t hunt,” we eliminate it because there are enough [other] lead sources that can generate that kind of return. If you measure it, track it, then make all your decisions based on that data, we don’t have to guess anymore.
The difference between cutting fat vs. cutting muscle
Cutting fat means eliminating what you can live without. You can then divert that money to create systems, acquire technologies or hire virtual assistants to do the things that are costing you a lot of money. When you cut fat and run lean, your business can survive and thrive. On the other hand:
If I’m a team leader and I get rid of my client care coordinator, or my transaction coordinator, that’s muscle. Those activities give me the ability to focus on business development and people development.
Workman goes on to explain that if you take on minimum wage administrative roles, there’s no way that you will ever hit a seven-figure income since you’re working for $10 to $12 per hour.
There’s no such thing as a bad lead; there are only people who aren’t ready yet
Based upon his decades of experience, Workman says that if he were to select a random team, he could probably find $500,000 to $1 million in lost income because agents don’t follow up with their B and C leads long enough.
Workman went on to explain how most agents are too focused on buying new leads as opposed to focusing on what he calls “legacy leads.” The reason is that most agents and teams lack the people and/or systems to follow up regularly with these leads.
Workman’s approach focuses on “systems first and assistants second.” This means you build operational excellence first and then get a good assistant to handle it all.
I think you should pay top dollar to get great people. [It’s better to] have fewer excellent people instead of a whole bunch of average people.
Here are the guidelines he gives to the agents and teams that Workman and his company coaches.
- Your first hire should be a client care coordinator who focuses on what happens before, during and after the listing is taken and under contract.
- For every 25 leads you generate, you should add a buyer’s agent. Consequently, if you’re generating 100 leads per month, you would need four buyer’s agents. Here’s why.
An agent can’t follow up with the A’s, B’s and C’s, if they have 25 this month, and then 50, then 75 and then 100. After four months, they’re at capacity, so we hire more people based on the lead count.
This assumes that you have the systems and assistants in place to handle this additional business.
Workman also says,
We follow up with people until they buy, die or file a restraining order. We stay in touch until they’re ready to buy a house. We don’t know when that moment is, but we have to provide real value during the communications process until they raise their hand and say that they’re ready.
- Once you get to 100 transactions, you split the client care coordinator role into two positions. The first role is a transaction coordinator who handles what takes place while the property is under contract through closing. With that person in place, you can then support three to four buyers’ agents, who should each be able to close 24 transactions per year.
The second role is marketing (lead generation). Workman likes to say that nothing happens until you generate a lead.
- The team leader should focus 100 percent on listings and never put a buyer in their car, because they are “time-sucking animals.”
- If you have 10 active listings, every listing should generate six to eight leads per month, so that’s 60 to 80 leads per month. If you always have at least 10 properties listed, that means, you need at least three buyer agents just to work the open houses and leads being generated by those listings.
Workman also emphasizes the importance of becoming a true expert in the business and creating real value in your communications during the lifecycle of your leads.
Is Zillow the best place to spend your lead generation dollars?
Workman is neutral in his approach to Zillow. However, here’s what he has observed among the agents and teams that he has worked with and who are using Zillow’s FLEX and Premier Agent programs:
According to Zillow, Premier Flex agents pay a percentage of their commission (depending upon their location and price range) of 20 percent to 35 percent in exchange for being handed qualified leads. Agents must maintain a minimum number of lead conversions to stay in the program.
Premier agents often spend $10,000 to $15,000 per month buying leads from Zillow, based upon a pay-per-click or lead fee. For that fee, they also receive premier placement on their listings in their market.
According to Workman, the Premier agents he works with have seen their net cost per lead go to about $150 per lead before Zillow implemented Flex. Today it can be up to or over $1,000 per lead. In other words, Premier gents are paying ten times more per lead than they were before Zillow implemented Flex and started referring those leads to agents paying a percentage of their commission.
The agents who have continued to use the Premier agent program are willing to accept a lower margin on that initial sale with the idea that once you make the sale, you adopt that client for the lifetime cycle of their transactions. The challenge is that once you split with your team leader and/or broker, you usually are not making very much money on the transaction.
Where agents are moving and why
Workman has spotted several key trends that virtually no one else is discussing.
As the market tightens, agents are searching for ways to reduce expenses. As a result, many traditional firms are experiencing a decline in agent count. To illustrate this point,
If you’re paying $1,000 a month to your brokerage with a 95/5 commission split and you can eliminate that $1,000 per month, you’re going to do it. So, we’re seeing this mass movement of people who have been through the downturn in 2008 and don’t want to do it again. They’re not just moving brokerages, they’re moving to [become] team leaders because they don’t want all the hassles of being in business by themselves anymore.
We’re also seeing tremendous growth with experienced agents joining teams and who are willing to work for 50 percent splits if [the team or brokerage] handles the marketing, the transaction coordinating, plus everything else and allows the agent to focus on just selling houses.
The second major trend is that the industry has transitioned from a low-skills-based market into a high-skills-based market. Since the end of the Great Recession, agents could succeed with minimal planning and basic skills.
If you have low skills, you have to do a lot more activities to get the same number of transactions. If you’ve been in the business for less than 10 years, you have never experienced that before.
If you’re an agent listening [or reading] this, you need to be with a broker or team leader where they’re going to give you that skills training, because it will make or break you in this market. Agents are joining teams that are well-coached because they’re getting a new set of skills that give them an unfair competitive advantage.
Before you spend $1 on lead gen, go after the free stuff first with ‘8651’ and ‘3-2-1’
An excellent way to grow your business today is to become a master of your database. Workman uses a technique called 8651:
- 86 transactions a year
- working with 50 people
- one hour a day.”
Here’s how it works:
- Make a list of the top 50 people in your life who you know, like and trust and who are willing to give you one referral a year.
We’ve created a system where you have one personal touch (face-to-face contact) with your top 50 every month. We go to lunch, we have coffee, or hold client appreciation events. If they don’t send you a referral, remove them from your list and replace them with someone who does. [Our clients] often end up doing 50, 60 or even 70 transactions from just meeting face-to-face monthly with their special group of their top 50.
In terms of your regular sphere of influence, call them four times a year. We do something called “Three-two-one” where you have to call three past clients or people in your sphere every day, prospect to add two new people to your database, and learn one new thing about your technology.
So, these are two systems that have zero cost associated with them and they generate real income.
Workman’s most recommended technologies
Workman encourages his clients to use the following technologies:
Workman is a huge fan of REDX for their FSBO, expired, and notice of default services, etc. REDX also scrubs any contacts they give you so that you’re in compliance with the Do-Not-Call-List laws. They also have an auto-dialer that Workman says, “is phenomenal.” REDX also integrates with Boomtown and Synch.
According to Workman, Sisu puts “your team dashboard on steroids.” They have full integration with the MLSs and you can see your conversion percentages on a dashboard.
KvCore provides a suite of products including websites, leads, CRM, marketing, listings, transactions, and analytics that can power a team or an entire brokerage with next-generation technology. KvCore also recently acquired Boomtown and Inside Real Estate which are widely used by a number of the industry’s largest companies.
Workman’s final takeaway
Today you have an incredible opportunity to gain market share. Every agent, every broker, and every team leader is at a choice point right now. Do you sit back and wait until things improve and hope they can come back? Or do you lean into the threats that exist in the marketplace, become the expert, get really good and take market share from those who fail to adapt to today’s market conditions? It’s your choice — what will you do?
Bernice Ross, president and CEO of BrokerageUP and RealEstateC